IDEAS home Printed from https://ideas.repec.org/a/epw/develo/v2y2022i2id15067.html

Threshold Effect of Macroeconomic Convergence Criteria on Real GDP Growth Rate within the East African Community

Author

Listed:
  • Michael Oloo
  • Mary Mbithi
  • Martin Oleche

Abstract

This study investigates how the thresholds set by the East African Monetary Committee (EAMC) have impacted the growth of the East African Countries (Kenya, Tanzania, Uganda, Rwanda, and Burundi). The analysis establishes the actual thresholds supported by a panel data model, running from 2005 to 2020, which are drawn from World Development Indicators data from the World Bank website. The actual thresholds obtained are compared to the thresholds adopted by EAMC. This data was analysed using a Dynamic Threshold Panel model; the results show a slight deviation of the actual (optimal) data thresholds from the thresholds adopted as the EAC criteria for the formation of a Monetary Union. Therefore, there is need to reconsider the thresholds criteria to enable them to become feasible for the member states to achieve so as to form the Monetary Union.

Suggested Citation

  • Michael Oloo & Mary Mbithi & Martin Oleche, 2022. "Threshold Effect of Macroeconomic Convergence Criteria on Real GDP Growth Rate within the East African Community," European Journal of Development Studies, European Open Science, vol. 2(2), pages 11-25, March.
    • Handle: RePEc:epw:develo:v:2:y:2022:i:2:id:15067
    DOI: 10.24018/ejdevelop.2022.2.2.67
    as

    Download full text from publisher

    File URL: https://eu-opensci.org/index.php/ejdevelop/article/view/15067
    File Function: Abstract page
    Download Restriction: no
    File URL: https://eu-opensci.org/index.php/ejdevelop/article/download/15067/3384
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.24018/ejdevelop.2022.2.2.67?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. repec:bla:jcmkts:v:44:y:2006:i::p:711-730 is not listed on IDEAS
    2. Slawomir I. BUKOWSKI, 2006. "The Maastricht convergence criteria and economic growth in the EMU," Quaderni del Dipartimento di Economia, Finanza e Statistica 24/2006, Università di Perugia, Dipartimento Economia.
    3. De Grauwe, Paul, 1996. "International Money: Postwar Trends and Theories," OUP Catalogue, Oxford University Press, edition 2, number 9780198775133.
    4. Chong Terence T. L. & He Qing & Hinich Melvin J, 2008. "The Nonlinear Dynamics of Foreign Reserves and Currency Crises," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 12(4), pages 1-18, December.
    5. Joseph Ademola FABAYO & Olubanjo Taiwo AJILORE, 2006. "Inflation: How Much Is Too Much For Economic Growth in Nigeria," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 41(2), pages 129-147, December.
    6. Chien-Chiang Lee & Swee Yoong Wong, 2005. "Inflationary Threshold Effects In The Relationship Between Financial Development And Economic Growth: Evidence From Taiwan And Japan," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 49-69, June.
    7. Paul De Grauwe, 2014. "What Have We Learnt about Monetary Integration since the Maastricht Treaty?," World Scientific Book Chapters, in: Exchange Rates and Global Financial Policies, chapter 11, pages 273-296, World Scientific Publishing Co. Pte. Ltd..
    8. Kuteesa, Annette, 2012. "East African Regional Integration: Challenges in meeting the convergence criteria for monetary union," Research Series 148956, Economic Policy Research Centre (EPRC).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bernard Njindan Iyke & Nicholas M. Odhiambo, 2017. "Inflationary Thresholds, Financial Development and Economic Growth: New Evidence from Two West African Countries," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 17(2), pages 1-11, June.
    2. Ndoricimpa Arcade, 2017. "Working Paper 249 - Threshold Effects of Inflation on Economic Growth in Africa: Evidence from a Dynamic Panel Threshold Regression," Working Paper Series 2359, African Development Bank.
    3. Charles B. Blankart & Sven Bretschneider, 2012. "Nutzen und Kosten eines Austritts Griechenlands aus dem Euro," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(09), pages 12-16, May.
    4. Crescioli, Tommaso & Martelli, Angelo, 2022. "Beyond the Great Reversal: Superstars, Unions, and the Euro," Single Market Economics Papers WP2022/8, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (European Commission), Chief Economist Team.
    5. repec:spo:wpecon:info:hdl:2441/602 is not listed on IDEAS
    6. Vassilis Monastiriotis & Sotirios Zartaloudis, 2010. "Beyond the crisis: EMU and labour market reform pressures in good and bad times," LEQS – LSE 'Europe in Question' Discussion Paper Series 23, European Institute, LSE.
    7. Simplice A. Asongu & Samba Diop, 2025. "An Index of African Monetary Integration (IAMI)," The International Trade Journal, Taylor & Francis Journals, vol. 39(1), pages 3-29, January.
    8. Charles B. Blankart, 2013. "Oil and Vinegar: A Positive Fiscal Theory of the Euro Crisis," Kyklos, Wiley Blackwell, vol. 66(4), pages 497-528, November.
    9. Ashagrie Demile, . "Inflation Growth nexus in Ethiopia Evidence from Threshold Auto Regressive Model," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 24(01).
    10. Tatomir Cristina Flavia & Alexe Ileana, 2012. "Fiscal Discipline And Convergence Of The Euro Area Candidates. Closer To The Performers Or To The Laggards?," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 163-168, July.
    11. Heinz Handler, 2013. "The Eurozone: Piecemeal Approach to an Optimum Currency Area," WIFO Working Papers 446, WIFO.
    12. Ali, Sharafat, 2014. "Inflation, Income Inequality and Economic Growth in Pakistan: A Cointegration Analysis," MPRA Paper 53706, University Library of Munich, Germany.
    13. Piumi Atigala & Tharaka Maduwanthi & Vishmi Gunathilake & Sanduni Sathsarani & Ruwan Jayathilaka, 2022. "Driving the pulse of the economy or the dilution effect: Inflation impacting economic growth," PLOS ONE, Public Library of Science, vol. 17(8), pages 1-17, August.
    14. Abban, Stanley, 2020. "On the Computation and Essence of the Nominal Convergence Criteria for Africa Currency Union: ECOWAS in Perspective," MPRA Paper 100215, University Library of Munich, Germany, revised 10 May 2020.
    15. Marc Flandreau & John Komlos, 2005. "Target zones in History and Theory : efficiency, credibility and policy autonomy," Working Papers hal-01065605, HAL.
    16. Deogratius W.H. Kimolo & Nicholas M. Odhiambo & Sheilla Nyasha, 2023. "Inflation Dynamics in Post-Independence Rwanda," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 105-116, December.
    17. Erik Jones, 2009. "Output Legitimacy and the Global Financial Crisis: Perceptions Matter," Journal of Common Market Studies, Wiley Blackwell, vol. 47(5), pages 1085-1105, November.
    18. Sławomir Bukowski, 2011. "Economic and Monetary Union – Current Fiscal Disturbances and the Future," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(3), pages 274-287, August.
    19. Yvonne Umulisa, 2020. "Estimation of the East African Community's trade benefits from promoting intra‐regional trade," African Development Review, African Development Bank, vol. 32(1), pages 55-66, March.
    20. Oziengbe Scott Aigheyisi, 2021. "Threshold Effects of Import Dependence of Economic Growth in Nigeria," ACTA VSFS, University of Finance and Administration, vol. 15(2), pages 198-219.
    21. Nasir Iqbal & Saima Nawaz, 2009. "Investment, Inflation and Economic Growth Nexus," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 863-874.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:epw:develo:v:2:y:2022:i:2:id:15067. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Support Team (email available below). General contact details of provider: https://eu-opensci.org/index.php/ejdevelop .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.